ChartSmarter Tuesday Game Plan 2/20/18 Game Plan

Markets completed one of their best weeks in years Friday, but gains were well off session highs. The Dow and S&P 500 recorded pedestrian gains just above the UNCH mark and the Nasdaq was unable to maintain its sixth straight advance. The tech heavy index did record a doji candle after a 700 handle move top to bottom the last 6 days, but it could be forgiven after the weekly jump of 5.3%. The Dow and S&P 500 tacked on 4.3% themselves this week and CLOSING just above their upward sloping 50 day SMAs. The Russell 2000 showed strength as it rose .4% to finish out the week, but it was the only of the aforementioned four that was unable to end ahead of its 50 day SMA. The dollar lost ground for an 8th week in the last 10, as the UUP is now lower by 12% from most recent 52 week highs. Scouring over some commodities it was interesting to witness the disparity in some of the resources. Copper for one via the JJC is just 3% off its recent highs, while perhaps the world is becoming a bit healthier as sugar as judged by the SGG is lower 42% off most recent 52 week highs. The chart shows a bearish descending triangle with a break below 26 carrying a measured move to the single digits. Not that appetizing for longs, pun intended.

For the second consecutive session the utilities were the first and third best performing sectors, but this time instead of being sandwiched by technology on Thursday, the healthcare group was the second best actor, a perfect trifecta for the defensive spaces. Lagging Friday were the energy, materials and cyclicals. On a weekly basis, there were clear out performers. Technology was the big winner as the XLK soared 5.7%, although Friday was unable to complete the 6 session winning streak as it recorded a shooting star less than .5% away from filling in an upside gap from 2/1, the day chaos ensued. Second best were the industrial and financial sectors with the XLI and XLF jumping 4.7%. Energy was a clear loafer as the XLE rose “only” 2.2%, recovering very little of the prior two weeks combined losses of 14.5%.

Regardless of market conditions, as volatile as they have been, breakouts will often be retested just to prove their trustworthiness. For those trigger shy investors who missed the initial move it is often a good idea to wait for a successful retest. When that occurs it is never clear sailing but one could have more confidence in the trade. Below is a good example and is the chart of ETSY and how it appeared in our Thursday 2/15 Game Plan. This name retested an 18 cup base trigger that was taken out originally on 12/5 on 2/6 and was well underneath it intraday, but CLOSED firmly 12% off session lows. Investors would have taken note that as the major averages made lower lows on 2/9, but ETSY did not. Today the stock decisively traded through its rising 50 day SMA, the very round 20 number and also above a double bottom trigger of 20.35 in the third best weekly gain in the last 1 1/2 years gaining 12.5%. Add to now above a long 21.96 cup with handle trigger in a pattern that began the week ending 7/17/15.